FAQ: Arizona LLC

Formation Services

If you are thinking about forming an Arizona LLC, you probably have a lot of questions. This article answers the most important ones — in plain English, not legal jargon. Read it from start to finish or jump to the question that matters most to you right now. When you are ready to form your LLC, we make it easy. To hire us to form your Arizona LLC today, call 480-664-7478 or complete our online LLC Formation Questionnaire.

Arizona LLC Basics

What is an Arizona LLC?

An Arizona LLC, or limited liability company, is a legal entity created under Arizona law that separates its owners (called members) from the company itself. The LLC owns its own assets, enters into its own contracts, and is responsible for its own debts and liabilities. If someone sues the LLC over a business debt or claim, your personal assets — your home, car, and bank accounts — are protected as long as you operate the LLC properly.

What are the benefits of forming an Arizona LLC?

The primary benefits of an Arizona LLC are:

• Personal liability protection. Members are generally not personally responsible for the LLC’s debts and lawsuits. This is the single most important reason people form LLCs.
• Pass-through taxation by default. The IRS does not tax the LLC itself. Income and expenses pass through to the members’ personal tax returns, avoiding double taxation.
• Flexible management. You choose whether the LLC is member managed or manager managed.
• Flexible ownership. Members can be individuals, corporations, other LLCs, trusts, or estates.
• Credibility. Operating as an LLC signals to customers and vendors that you are a serious business entity.
• No Arizona franchise tax. Arizona does not charge an annual franchise tax or annual fee on LLCs — a significant advantage over states like California, which charges a minimum $800 annual LLC tax.

Who can form an Arizona LLC?

Almost anyone can form an Arizona LLC. You do not have to be an Arizona resident. A single person, a married couple, multiple partners, a foreign national, a corporation, another LLC, a trust, or an estate can all be members of an Arizona LLC.

What do we call an owner of an Arizona LLC?

Owners of Arizona LLCs are called members.

How many members does an Arizona LLC need?

An Arizona LLC must have at least one member. There is no maximum. A single-member LLC is entirely legal and very common. Multi-member LLCs can have two or more members with any ownership percentages the members agree to.

Naming Your Arizona LLC

What name can I give my Arizona LLC?

Your Arizona LLC name must:

1. Be distinguishable from all other LLC and corporation names already on file with the Arizona Corporation Commission (ACC).
2. End with “Limited Liability Company,” “L.L.C.,” or “LLC” (or the PLLC equivalent for professional LLCs).
3. Not contain words that imply it is a government agency or a regulated profession unless you are properly licensed.

You can check name availability for free on the Arizona Corporation Commission’s website. A slight variation — adding or removing a word, changing a singular to a plural — may make an unavailable name available.

Can I reserve an Arizona LLC name before I am ready to file?

Yes. You can reserve an LLC name with the Arizona Corporation Commission for up to 120 days for a small fee. The reservation gives you a six-digit reservation ID you will need when you file the Articles of Organization. If you are not ready to file right away, a name reservation prevents someone else from taking the name while you prepare.

Creating Your Arizona LLC

What document creates an Arizona LLC?

An Arizona LLC is legally created when the Arizona Corporation Commission approves the LLC’s Articles of Organization. The Articles of Organization is a one-page document that states:

• The LLC’s name
• The LLC’s statutory agent and that agent’s address
• The LLC’s principal address
• Whether the LLC is member managed or manager managed
• The names and addresses of all members (member-managed) or all 20%-or-greater members and all managers (manager-managed)

The LLC does not legally exist until the ACC approves the filing. Everything in the Articles of Organization is public record.

How do I file the Articles of Organization?

You file the Articles of Organization online through the Arizona Corporation Commission’s eCorp system at ecorp.azcc.gov. You must first create a free eCorp account. The online process takes about 10 minutes and involves 10 steps:

1. Create an ACC account (or log in)
2. Entity search — check that your name is available
3. Entity information — email address, effective date, character of business
4. Statutory agent — name, address, and email
5. Principal address
6. Member and manager information
7. Organizer information
8. Optional document upload (if using custom Articles)
9. Digital signature
10. Review and payment

See our detailed step-by-step guide with screenshots: How to Form an LLC in Arizona Online in 10 Minutes.

How much does it cost to file the Articles of Organization?

The Arizona Corporation Commission charges $50 for regular processing and $85 for expedited processing. When filing online through the eCorp system, only the $85 expedited filing fee is available. Paper filings use the $50 regular fee. These ACC fees are paid directly to the state and are separate from any attorney fees.

How long does it take for the ACC to approve an Arizona LLC?

When you file online and pay the $85 expedited fee, the ACC typically approves the LLC the same day — often within minutes — once the statutory agent accepts the appointment. Paper filings with the $50 regular fee take longer. Check current ACC processing times on the ACC website.

What is an organizer?

An organizer is the person who signs the LLC’s Articles of Organization. The organizer does not have to be a member or manager of the LLC. The organizer’s role ends once the Articles of Organization are filed. Every LLC needs at least one organizer. When an attorney forms your LLC, the attorney typically serves as the organizer.

Statutory Agents

What is a statutory agent and why does my Arizona LLC need one?

A statutory agent — called a “registered agent” in most other states — is the person or entity designated to receive legal papers on behalf of the LLC. This includes lawsuits, subpoenas, and official government notices. Every Arizona LLC must have a statutory agent. The statutory agent must have a physical street address in Arizona (a PO box is not acceptable).

The statutory agent can be:

• An individual who is a permanent, full-time Arizona resident
• An Arizona corporation or LLC
• A foreign corporation or LLC authorized to transact business in Arizona

The LLC itself cannot serve as its own statutory agent.

What happens if the statutory agent does not accept the appointment?

This is critical. After you file the Articles of Organization, the ACC sends the statutory agent an email asking them to log in to their eCorp account and formally accept the appointment. The statutory agent has only 7 days to accept. If the statutory agent fails to accept within 7 days, the ACC automatically rejects the filing — without review — and the LLC is never formed. Make sure your statutory agent knows to watch for the ACC email and accept the appointment immediately.

Can I be my own statutory agent?

Yes, if you are a permanent, full-time Arizona resident over age 17 with a permanent physical street address in Arizona. However, being your own statutory agent means your name and address appear on the ACC’s publicly searchable records. Many LLC owners prefer to use a professional statutory agent to keep their personal information off the public record.

Can I hire KEYTLaw to be my statutory agent?

Yes. KEYTLaw, LLC, serves as statutory agent for Arizona LLCs for $99 per year. Using KEYTLaw as your statutory agent means our firm’s address — not yours — appears on the ACC’s public records. To hire KEYTLaw as your statutory agent, complete and submit our online Statutory Agent Questionnaire.

Member-Managed vs. Manager-Managed

What is the difference between a member-managed and a manager-managed LLC?

Every Arizona LLC must be one of two types:

• Member managed. Every member — even a 1% owner — has the legal authority to sign contracts, incur debts, and take actions that legally bind the LLC. This is the most common structure for small businesses with one or a few owners who all participate in running the business.
• Manager managed. Members have no management authority. Only the designated managers — who may or may not be members — can sign contracts and act on behalf of the LLC. This structure is appropriate when passive investors own membership interests but only certain people should control the business.

You must specify the management type in the Articles of Organization. If you later need to add or remove a manager in a manager-managed LLC, you must file an amendment to the Articles of Organization with the ACC.

What information about members must appear in the Articles of Organization?

For a member-managed LLC, the name and address of every member must be listed. For a manager-managed LLC, the name and address of every member who owns 20% or more of the LLC’s profits must be listed, along with the name and address of every manager. All of this information is publicly accessible on the ACC’s website.

Operating Agreement

What is an Operating Agreement and does my Arizona LLC need one?

An Operating Agreement is a private contract among the members of the LLC that governs how the LLC is owned, managed, and operated. Arizona law does not require an LLC to have one — but operating without one is a serious mistake.

Without a written Operating Agreement, your LLC is governed by Arizona’s default LLC statutes, which are often unfavorable and may not reflect what you and your co-owners actually intend. A well-written Operating Agreement addresses:

• Ownership percentages and capital contributions
• How profits and losses are allocated
• Management authority and decision-making rules
• What happens when a member dies, becomes disabled, or wants to sell
• How the LLC is dissolved or wound up
• For married members: ownership as community property with right of survivorship

Read our article 19 Ways You Can Be Harmed if Your Arizona LLC Lacks a Well Written Operating Agreement to understand what is at stake.

How much does KEYTLaw charge to prepare an Operating Agreement?

KEYTLaw charges $297 for a custom Operating Agreement for a single-member LLC or a married couple LLC, and $797 for a multi-member LLC. To hire us, complete our online Operating Agreement Questionnaire. All LLCs we form include a custom Operating Agreement.

Arizona Married Couples and LLC Ownership

Do both spouses need to be listed as members if a married Arizona couple owns the LLC?

It depends on the management structure. For a member-managed LLC, Arizona law requires both spouses to be listed as members when the membership interest is community property. For a manager-managed LLC, both spouses must be listed if they own 20% or more of the LLC’s profits as community property. The omission of a spouse from the Articles of Organization does not eliminate that spouse’s ownership rights, but it creates confusion and potential legal disputes.

If a married person wants to own an LLC interest as separate property — not as community property — the non-owner spouse must sign a written Disclaimer relinquishing any ownership claim in the LLC interest.

What is community property with right of survivorship, and why does it matter for an LLC?

Arizona recognizes two types of community property:

• Standard community property. When one spouse dies, the deceased spouse’s half interest does not automatically transfer to the surviving spouse. It may need to go through probate or pass under the deceased spouse’s will or trust — which could leave the interest to someone other than the surviving spouse.
• Community property with right of survivorship (CPWROS). When one spouse dies, the deceased spouse’s half interest automatically transfers to the surviving spouse — no probate required.

To own an LLC interest as CPWROS, both spouses must sign a document — such as the LLC’s Operating Agreement — that contains specific statutory language agreeing to that ownership form. KEYTLaw’s Operating Agreements include this language for married members who want automatic transfer on death.

Taxes and Annual Requirements

How is an Arizona LLC taxed?

By default:

• A single-member LLC is treated by the IRS as a disregarded entity. Its income and expenses flow directly to the owner’s personal tax return (Schedule C). No separate federal tax return is filed for the LLC.
• A multi-member LLC is treated as a partnership. It files a partnership return (Form 1065), and each member receives a Schedule K-1 reporting their share of income or loss.

An LLC can elect to be taxed as an S corporation or C corporation by filing the appropriate IRS election forms. Arizona follows the federal tax classification for state income tax purposes. Consult a CPA before choosing a tax classification. Richard C. Keyt is both an Arizona LLC attorney and a former CPA — he can advise on both the legal and tax dimensions of your LLC.

Does Arizona have an annual LLC fee or franchise tax?

No. Arizona does not impose an annual franchise tax or annual fee on LLCs. This is a major advantage over states like California, which charges a minimum $800 annual LLC franchise tax — even if the LLC earns no money. Arizona LLC owners pay state income tax on their share of LLC income, but there is no additional state tax just for being an LLC.

Does an Arizona LLC need an EIN?

Arizona does not require an EIN just to form an LLC. However, most LLCs need an EIN (federal Employer Identification Number) to open a business bank account, hire employees, or elect to be taxed as a corporation. A single-member LLC with no employees may use the owner’s Social Security Number for tax filing, but obtaining an EIN is strongly recommended. You apply for an EIN for free at irs.gov.

What is the Arizona LLC annual report requirement?

Arizona is one of the few states that does not require LLCs to file an annual report with the Arizona Corporation Commission, and the ACC charges no annual LLC fee. This is another cost-saving advantage of forming your LLC in Arizona. (Arizona corporations, by contrast, must file an annual report and pay an annual fee.)

Professional LLCs (PLLCs)

What is an Arizona PLLC?

A PLLC — professional limited liability company — is the LLC form required when the members are licensed professionals in the same profession, such as attorneys, doctors, dentists, engineers, architects, or accountants. A PLLC provides the same liability protection and management flexibility as a standard LLC. The formation process is identical to a standard LLC, but the name must end in “PLLC” or “P.L.L.C.” and all members must hold the required professional licenses.

Estate Planning for Your Arizona LLC

What happens to my LLC when I die?

If you own your LLC membership interest in your personal name and you die without a trust, your LLC interest must go through Arizona probate before it can be transferred to your heirs. Probate is expensive, time-consuming, and public. Your loved ones may have to wait months or longer to gain control of the business.

To avoid probate on your LLC interest, you should:

• Own the interest in a revocable living trust (KEYTLaw’s Gold LLC package includes one)
• Use an LLC beneficiary designation form
• Hold the interest as community property with right of survivorship with your spouse

Read our article 3 Ways Your Loved One Will Be Harmed If You Own an LLC and Do Not Prepare for Death.

After Your LLC Is Formed

What should I do after forming my Arizona LLC?

After the ACC approves your Articles of Organization, several important tasks remain:

1. Download your documents. Log in to your ACC eCorp account and download the approved Articles of Organization and the ACC approval letter. Save them with your important business records.
2. Sign an Operating Agreement. Have all members sign a written Operating Agreement — do not skip this step.
3. Apply for a federal EIN at irs.gov.
4. Open a business bank account in the LLC’s name. Never commingle personal and business funds.
5. Transfer assets. If the LLC will own real estate, vehicles, or other property, transfer title into the LLC’s name.
6. Obtain business licenses or permits required by the state, county, or city for your type of business.
7. Comply with any publication requirement if your statutory agent’s address is outside Maricopa County or Pima County.
8. Plan your estate. Make sure your LLC interest will pass to your loved ones without probate.

Hire KEYTLaw to Form Your Arizona LLC

What Arizona LLC formation packages does KEYTLaw offer?

KEYTLaw offers three LLC formation packages. All three include a custom Operating Agreement and same-day filing and approval.

• Bronze LLC — $497. Includes 9 services. Best for those on a budget who need a solid LLC with a compliant Operating Agreement.
• Silver LLC — $897. Includes 15 services. Our most popular package.
• Gold LLC — $1,397. Includes 21 services. This is our confidential LLC. A revocable living trust is named as the sole member, keeping your name and home address off the ACC’s public records. The trust also transfers the LLC and other trust assets to your loved ones at death without probate.

See the full contents of each package at azllc.com/contents.

What is a confidential LLC and how does it protect my privacy?

In our Gold LLC formation package we draft a revocable living trust for you. The trust — not you personally — is listed as the sole member of the LLC in the public Articles of Organization. KEYTLaw’s address is used for the trust. This keeps your personal name and home address off the Arizona Corporation Commission’s publicly searchable database. The trust names you as the trustee and beneficiary so you retain full control and all economic benefits of the LLC.

How do I hire KEYTLaw to form my Arizona LLC?

Two easy options:

• Online: Complete and submit our LLC Formation Questionnaire. The process takes 5 to 10 minutes.
• Phone: Call Richard Keyt (father) at 480-664-7478 or Richard C. Keyt (son) at 480-664-7472.
• Book a free consultation: Schedule a free phone, office, or Zoom consultation at keytlaw.com/rk (Richard) or keytlaw.com/rck (Ricky).

100% Satisfaction Guarantee. If you hire us and are not satisfied, we will refund your LLC formation fee less the ACC filing fee. Nobody gives you more than we do for the price.

Arizona LLC attorneys Richard Keyt and his son, attorney and former CPA Richard C. Keyt, have formed 10,000+ Arizona LLCs. When you hire us, an experienced Arizona LLC attorney — not a paralegal or an online form service — forms your company, drafts your custom Operating Agreement, and files your Articles of Organization the same day.

See the fees and contents of our 3 LLC Formation Packages. To hire us to form an LLC submit our online questionnaire at azllc.com/llcq, or call 480-664-7478 or email [email protected].